Question 3 The information of Chocolate Berhad is described as follows: Sales Variable costs Total contribution margin Fixed costs EBIT Interest expense Earnings before taxes Taxes (30%) Net income RM600,000 200,000 400,000 150,000 250,000 50,000 200,000 60,000 RM140,000 Required: a) What is Chocolate Berhad's BEP(RM)? b) Determine Chocolate Berhad's operating leverage at this level of output. c) Calculate the degree of financial leverage at this level of output for Chocolate Berhad d) What is the combined leverage for Chocolate Berhad? e) If sales increase by 10%, what will be Chocolate Berhad's EPS if the firm has 50,000 shares outstanding?

Question 3 The information of Chocolate Berhad is described as follows: Sales Variable costs Total contribution margin Fixed costs EBIT Interest expense Earnings before taxes Taxes (30%) Net income RM600,000 200,000 400,000 150,000 250,000 50,000 200,000 60,000 RM140,000 Required: a) What is Chocolate Berhad's BEP(RM)? b) Determine Chocolate Berhad's operating leverage at this level of output. c) Calculate the degree of financial leverage at this level of output for Chocolate Berhad d) What is the combined leverage for Chocolate Berhad? e) If sales increase by 10%, what will be Chocolate Berhad's EPS if the firm has 50,000 shares outstanding?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 87PSB

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